Education, not immigration, is UK’s dangerous burden

Don't worry Tubbs, they'll not get far! Pic: League of Gentlemen Poster

Comment “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means." So British Prime Minister Theresa May told her party’s conference last week.

Home secretary Amber Rudd laid out plans at the conference to make it harder for British employers to hire overseas staff, particularly from the EU.

These included tighter tests for firms taking on workers from abroad. “The test should ensure people coming here are filling gaps in the labour market, not taking jobs British people could do,” she told the faithful.

Her speech outlined proposals for firms to compile lists of foreign staff and to name and shame employers – proposal that ignited condemnation and criticism.

The Home Office has since pulled back from its minister's position, telling firms the proportion of international workers companies employ “may” be one of the pieces of information firms have to provide government, but that the data would not be made public.

Don’t heave a sigh of relief just yet. Last week’s plans are the latest in a long tail of policy drift by a ruling party that’s determined to make employers part of a Brits-first immigration-control plan.

As Home Secretary, May wanted to tax firms £1,000 a head per skilled worker brought in from outside the EU.

If there’s a sector of the British economy that proves the false notion of May’s claim about world citizens outside of financial services, it’s the tech sector.

Little else in the British economy is so internationalised - except perhaps financial services, science or health. And we’re not just talking about “them” being “over here” - corporate Yanks like the Apples, Googles and Microsofts.

We’re talking about British firms hiring foreign talent and of British firms founded by citizens of other countries. Firms that are hiring foreign nationals who already live here.

Just how international is the UK tech economy? Fourteen per cent of all UK firms were created by non-UK nationals, says the Center for Entrepreneurs and DueDil; 19 per cent of our technology workforce hail from EU countries; and further 15 per cent non EU.

The 2014 ONS Annual Business Survey found 23,000 UK companies are foreign-owned – one per cent of UK businesses – with 52 per cent of foreign ownership from Europe and 25 per cent the US.

Half of the fintech sector – TransferWise, Funding Circle and GoCardless to name three - are from overseas, says the 2014 Landscaping UK Tech report by UK Trade & Investment & Ernst & Young. One in five directors of UK tech firms are from overseas.

Firms that the The Reg has spoken to reckon their percentage of non-UK-employees runs from 10 to 90 per cent.

The reaction to the Brits-first agenda of May and Rudd?

“I was gobsmacked, frankly, quite shocked,” says Kate Craig-Wood, managing director of Surrey-based hosting firm Memset. “Why gather that information? It just seems sinister, as well as isolationist and xenophobic.

“I fear it is an insight into the upper echelons of the Conservative party at the moment – naming and shaming companies that employ too many immigrants. It’s madness, frankly.”

John Newton is chief technology officer and founder of Alfresco Software, one of Britain’s most successful tech firms. Newton is not just an American by birth who chose to base Alfresco in the UK, but the head office is in Maidenhead – the prime minister’s constituency.

Speaking for himself, not for Alfresco, Newton said he was stunned. “I’m not a UK citizen, but I feel like I have contributed a tremendous amount to her constituency,” Newton told The Reg. “I don’t like the idea of have to register myself at all!”

“It’s like they’ve embarked on a war with the business community,” Sheibani says.

The fallout of the anti-foreigner rhetoric from the Conservative Party conference last week, the noise of UKIP and the EU referendum campaign is already being felt.

Foreign workers are beginning to turn away from tech UK.

Lead Brexiteers Liam Fox, David Davis and Boris Johnson made much of India as a prime market for UK exports, in a free-trading world free of the EU.

But the shock headlines from their party’s conference aren’t just being read in the UK, they are being consumed in India too - and they aren’t going down well.

Also on the agenda from last week are restrictions on foreign students studying in the UK. The Hindustan Timeswrote last week: “The [Rudd’s] plans will add to perceptions in countries such as India - from where student numbers have drastically come down in recent years because of visa curbs - that Britain is less welcoming for international students than competing countries such as Australia and Canada.”

At home, EU nationals working in UK tech are re-evaluating futures.

Newton told us: “I was at regional CBI meeting and there were heart felt speeches by non UK-people saying they are seeing their staff return to their native companies - going back to Germany because they have an uncertain future in the UK. One person said I have to start thinking the same thing.”

Expect a brain drain...

According to Newton, Britain now faces a brain drain comparable that of the 1950s and the 1960s when engineers, scientists and research talent left the dismal post-war, underfunded and union-ravaged Britain for the US.

Rune Sovndahl – a Dane and co-founder of app-based domestic services firm Fantastic Services – told us the restlessness is spreading among his peers.

Other foreign-born entrepreneurs based in London are talking about moving to Barcelona or Berlin. So far he hasn’t seen them acting on this, but until now the nature of Brexit had been vague, Sovndahl said.

May, however, has cemented Brexit – it now seems that it is going to happen. “People might actually start looking at renting places or looking at office space. We’ll see what happens over the next couple of months,” he said.

The director of Peritus Recruitment Solutions, Martin Blake, who deals with some big, house-hold names of corporate tech, told us that the prevailing anti-foreigner rhetoric is already hurting the ability of colleagues to hire talent not born here.

“The whole name and shame would impact companies ability to hire. I have friend who is finding it very hard to attract Euro candidates coming to the UK because they now see it as a hostile environment. He’s struggling to attract people to the UK.”

What does this mean for the UK?

If you were to dip into the pro-Brexit tweet streams or read the dailies Mail or Express, it could see that overwhelming UK sentiment would be likely be to thumb our noses and say: “So what? Good riddance.”

But the fact technology firms in the UK are hiring people born and raised overseas belies a major structure crisis in British training, skills and education, and attitudes to work.

The competition for skills and qualified staff isn’t just intense – it’s global. Which is one reason why firms are tapping up talent in centres of specialization outside the UK.

Newton told us: “We are in competition with other software companies and banks – 25 per cent of the budgets of banks goes into IT and a very large portion of that is people costs and they are trying to hire the best and brightest too. What will happen is we are competing for a dwindling pool of people.

“We are willing to get anybody who is qualified - we are non discriminatory in how we hire.”

Alfresco needs not just skilled open-source developers but also support staff able to speak a range of languages, as Alfresco's UK centre is a major support hub.

Echoing the need for languages is Mike Laven, chief executive of fintech firm Currencycloud: “We aim to attract the best talent we can from all over the world. In addition to requiring specific skills in finance and development, our global strategy means we also need to be staffed with people who can speak the multiple languages of our clients and business partners. As such, we look at the EU as our extended talent pool.”

Then there is ability.

About 10 per cent of Memset’s staff are from overseas, rising to about 20 per cent of recent recruits, because of a lack locally of specialists in Linux and Python. “That extra 20 per cent is important for us, and not something we should be stigmatized for,” Craig-Wood told us. “We see it as a real plus.”

Chronic shortage of programming skills is writ large but our historical shortage is replicating into new fields – AI in vehicles, virtual reality, financial technology and Blockchain. The burgeoning talent pools for these fields is in Europe.

Frost & Sullivan digital transformation analyst Vijay Michalik told The Reg: “A lot of talent is coming out of academic institutions and startups across Europe, where people would like to see some of that talent brought into the UK.

“Acquisition of talent and of other startups would bringing some of that talent to the UK – for example, in fintech looking at Blockchain. There’s quite a lot of developer talent in Germany and Estonia that people would like to see in the UK to augment our fintech.”

Daniel Rovira, co-founder of recommendations startup Itcher, is blunt. His firm wrangles data and APIs, taking ratings and returning information to customers on their digital device running either iOS or Android.

According to Rovira, there exists what he calls a “screaming demand” for developers, data scientists and business analysts. “Without the overseas hires it would be absolutely impossible for us to get staff. Even before these measures have been implemented I can sense that people are less excited to move to London. The magic is gone somehow,” Rovira said.

In the corporate field is Nuno Job, founder and CEO of consultant YLD, a 50-person firm started in 2013 in London and whose clients include British Gas, Thomas Cook Group, Trainline and The Economist.

Software engineering specialist Nuno’s firm helps some of the giants of British business laden with legacy kit to go digital.

A Portuguese national, Job reckons just 10 per cent of his staff are British, the rest from various countries in Europe and executives from the British Commonwealth. And those numbers look set to increase. I spoke to Job when he was fresh from conducting a series of interviews for a new hire; not a single applicant for the post was a UK-born citizen, he told us.

“Nobody from the UK interviews,” he told me. “I’ve found that, especially for a lot of entry level jobs, there’s not a lot of applicants from the UK – [or] close to none,” Job said.

Entry level here means internships for the back office and as assistants, for office mangers, finance analysts and operations analysts.

“We are looking for people who are very ambitious and want to be executives some day and people who can do the job – people who come from good schools or who have gained great experience in their field.”

Schooling the tech sector

Many of the firms say they are responding to a apparent failure by Britain to produce the right kind of candidates for technology positions. Whether it’s the complacency born of national pride or too much meddling in education by politicians, one thing is clear: the workers Britain needs in tech are coming from – among others – the 27 EU member states which, miraculously, have somehow managed to train the right people and who are overtaking Britons.

Susan Bowen, vice-president and general manager of Canadian-based cloud platform company Cogeco Peer 1, says the non-UK nationals who make up a significant proportion of staff at its European HQ in Southampton provide multi-lingual support to businesses across Europe, the Middle East and Africa.

“It’s vital our staff not only speak the same language as our customers, but are also well-versed in the business and culture of the region,” she says. Bowen says that about a tenth of Cogeco Peer 1’s UK workforce are apprentices or interns, and it provides comprehensive training.

However, she adds that “we really need to begin with schools” to plug the skills gap in science, technology, engineering and maths which leads companies to hire from outside the UK. “There is still a societal attitude that STEM subjects are boring from both girls and boys and, as an industry, we need to challenge this viewpoint. We need to make digital roles more attractive.”

The company is supporting school coding clubs in Hampshire.

As to the argument that employers should be training Britons, “I laugh at it,” Sovndhal says – not because it’s a bad idea, but because Fantastic Services already trains its recruits. “But you can only have a certain amount.” He reckons that it’s possible to have 30 per cent of staff as trainees, but the rest need to have experience: “Otherwise you end up with ‘no one knows what they’re doing’.”

Askar Sheibani, chief executive of telecoms equipment maker Comtek Network Systems, blames decades of government policy. Failure to improve the education system has undermined attempts by employers working with apprentices.

Sheibani says of school-leavers that “a lot of them can’t write English, they can’t do maths properly, they have very little work ethic,” adding: “There’s an institutional problem with education.” Also, British graduate engineers are more theoretically focused than those from countries such as the Ntherlands, meaning it takes longer and costs more to train them.

The Brexit government has uncorked a dangerous genie: a mandate driven by ideology and a promise of a somehow better tomorrow, which has not been quite explained.

This local-jobs-for-local-people drive - a bitter sop for the free market thinkers who championed exit from the EU - would mean a system of rules and regulations would decide your business's future rather than the competition of free-market labour.

That might suit a Conservative party building a protectionist agenda, but it’s a relic of a bygone age. Protectionist hiring policies are the hallmark of insecure systems that produce inefficient economies, with hiring practice based on nomenclature - whom you know rather than what you know. It’s hiring cronies and recruitment based on where you were lucky enough to be born, not what you know or can do.

That might play well in heartlands of Sunderland or Essex and ensure Brits go first, but the real talent is going to Silicon Valley, Berlin or Estonia instead.

It’s the hallmark of the former USSR and of today’s Venezuela.

If theory isn’t enough, there’s practice. Put aside for a moment May’s claimed fallacy of world citizenship – a picture bluntly at odds with the tech economy.

Suppose all this subsides, that the Britain First tack softens and foreigners are once again welcomed. Through what route will they now enter the country, if not though the single market and the free movement of peoples accompanying it?

Free movement of labour is one of the four principles of the EU but leaders of Leave talked of replacing that with an “Australian-style points system” to enter and work in the UK. May, however, has quickly and cleanly dispatched this as unworkable.

So what next? More paperwork and red tape, something we were told leaving the EU would eliminate.

Getting a visa for rest of the world is already a laborious process. Rovira told us: “We actually had to sponsor the New Zealander, which was a real pain. Just the thought of having to do that for all European hires frightens me.”

Memset’s Craig-Wood says IT and other services businesses are likely to get hit by new trade barriers given the government’s apparent hard-line approach to Brexit, which, making it harder to recruit from overseas, would just make it worse.

The paperwork is a pain and not just for the small companies.

Moving staff between international offices is a fact of life for those Apples, Googles and Microsofts. It’s a perk of the job that firms hold out as a lure to increase their attractiveness: the ability to transfer to London is a big plus.

Peritus Recruitment Solutions' Martin Blake told us: “If you spoke to HR executives you’d find it would impact them by not being able to move people around. They like having a deployable workforce, and sometimes people need to be able to move because that’s where the customer market is.

“Restrictions would have a commercial impact and ability to attract and retain top talent. If an executive who wants to come to the UK is restricted from doing stuff, global head-hunting forms – that’s going to massively restrict them. They will end up fishing from a much smaller point and that will have a knock-on [effect] to a company's ability to attract talent.”

The party of May and Rudd can pander to their sense of romantic nationalism or national grief or both, and it can keep telling the party faithful one thing and the rest of us something else.

But in so doing they conflate nationalism with patriotism that doesn’t recognise the characteristic that define a successful tech economy and they overlook the actual problems Britain faces. They are kicking the UK down, not pushing us up, the league table of tech economies, innovators and employers.